Abstract
The article delves into the India’s pivotal role in facilitating the cross-border energy trade in South Asia and its environmental implications. It highlights India’s leadership in regional energy cooperation through various initiatives and frameworks such as SAARC, BIMSTEC, and the proposed South Asian Regional Power Exchange (SARPEX). The paper discusses key developments in cross-border energy agreements, emphasizing India’s bilateral electricity trade with neighbouring countries and its advocacy for regional power-sharing arrangements. It also addresses the environmental impacts of these initiatives, both positive and negative, such as the promotion of renewable energy sources and the potential risks associated with large-scale hydropower projects.
Introduction
South Asia’s energy consumption depicts that 2/3rd of the total energy is imported, ripping the rug out from under many trade policy analysts since there lies an abundance of untapped renewable resources not only in the Indian sub-continent but also in other South Asian countries like Bhutan, Nepal and Bangladesh which are capable of being transformational but due to lack of adequate and advanced technology, they fail to channelize the resources into an operative energy. According to a recent report in the Nepali Times, a pact was signed by the external affairs minister S Jaishankar in the Early January of 2024 of a 25-year energy trade within the ambit of which Nepal will be responsible for exporting 10,000 MW to India in the span of next decade. A tripartite energy trade deal- The Power Sales Agreement is also working out between India (Indian Energy Exchange), Nepal (Nepal Electricity Authority) and Bangladesh (Bangladesh Power Development Board), encompassing the transport of hydropower in Bangladesh through India, which would be the first transmitted to India by Nepal.
The Indian Energy Exchange (IEX) is primarily responsible for expediting trade among other South Asian nations. The IEX laid the foundation of cross-border energy trade by joining hands with Nepal in April 2021 and integrating it in the ‘Electricity Day Ahead’ marketplace, which primarily focused on delivering electricity from a physical trading market within a short period.
The evolution of CBET (Cross Border Energy Trade) began in the year 1954 with the Koshi Agreement, which was an alliance between India and Nepal. The agreement was mainly constituted to bar the flow of river Koshi and manage floods, but it also simultaneously gave rise to Power generation through hydroelectricity which would be beneficial for both countries. South Asian countries took precedence from other international countries like Africa and Europe and their collaboration in the regional arena wherein they recognised multiple benefits in the energy sector. Currently, The South Asia Roadmap for the World Bank’s Climate Change Action Plan- South Asia roadmap (2021-25) underscores territorial participation to decarbonize energy creation and provincial business sectors to streamline power assets and scale the job of sustainable power in cleaner energy exchange.
India on the Forefront
India has proven to be the flagbearer of the recent developments in the energy sphere since it was a strong supporter of the multilateral energy trade during its inception. While primarily focused on domestic power trading, the IEX allows neighbouring countries to participate in platform for cross-border electricity trade through a multifaceted approach encompassing bilateral agreements, infrastructure development, and regional initiatives.
For instance, India supplies over 1,000 MW to Bangladesh, while also engaging in seasonal power exchanges with Nepal. India has invested heavily in cross-border transmission infrastructure, exemplified by projects like the Baharampur-Bheramara line with Bangladesh and multiple high-capacity lines with Nepal. On a broader scale, India champions regional cooperation through initiatives such as the BBIN (Bangladesh-Bhutan-India-Nepal) framework and the concept of a SAARC Energy Ring. The country has also taken policy measures, issuing guidelines for cross-border electricity trade in 2018 and proposing ambitious projects like the One Sun, One World, One Grid (OSOWOG) initiative. Furthermore, India’s expertise in renewable energy, particularly solar power through the International Solar Alliance, positions it as a key player in shaping the region’s future energy landscape. By leveraging its geographical position, technical know-how, and economic strength, India has not only enhanced energy security in the region but also fostered economic integration and diplomatic ties among South Asian nations, solidifying its role as a leader in cross-border energy trade. Some of the summits depicts the significant role that India played in the expansion of the cross-border energy trade:
G-20 Summit 2023
The 18th edition of the G-20 Summit took place in New Delhi, India. ‘Transnational Grid Interconnections for One Sun, One World, One Grid’ (OSOWOG)themed conference was powered by Power Grid Corporation of India (A Maharatna) under the Ministry of Power to discover the latitude which can be covered with respect to the cooperation and concerted efforts towards the procurement of sunlight for solar energy. Shri R.K Singh, the union minister for Power and New and Renewable energy, emphasised India’s OSOWOG initiative, which would include other South Asian nations for the transnational grid interconnections, would make these nations more independent since the sun is a substantial source of renewable energy which is easily available because half of the planet is always immersed in the sunlight. Some of the major highlights from the conference were:
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Post implementation of OSOWOG, the electricity will never run out and it would unite India with nations who don’t have access to electricity as it will lend a hand to those who are deprived of it.
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OSOWOG would make electricity more economical, lower reliance upon fossil fuels and reduce dependence on energy reserves.
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It also accentuates the theme of G20 2023, ‘Vasudhaiva Kutumbakam’ which translated in English means “One-Earth, One-Family, One-Future” focusing on creating an alliance of international cooperation in the energy sphere and sharing research and development to reach a sustainable energy generation.
Global Biofuels Alliance was an initiative led by India which would integrate international organisations, different countries and their governments to encourage the adoption of biofuels since it would not only be imperative for a better energy procurement but it would also lead to economic growth and job creation. Its end objective is to increase the set standards for biofuel, increase the size of the existing biofuel markets and improve the current scenario of demand and supply with regards to it.
International Solar Alliance’s synergy with India
India’s engagement with the novice functioning International Solar Alliance was enhanced due to its objective of achieving a solar energy equipped world, which was first a concept introduced in the Paris Agreement of 2015. OSOWOG initiative came into the picture at the first ISA Assembly itself in 2018. The hybrid architecture of the Paris agreement which gave rise to ISA’s legal formation claimed to be ‘soft law in a hard shell’ and even though it was considered to be a motivated working organisation, it has been only doing the ground-level work which includes only research in various and specific areas. There are three areas of precedence-
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Analytics and Advocacy
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Capacity Building
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Programmatic Support
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BIMSTEC acts as a safe space for the member countries fostering sustainability, self-reliance and adaptability by letting them experiment and meet their energy needs by growing their innovative inventory of electricity.
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BIMSTEC member countries would have prospective plans to strengthen and develop power grid interconnections, making the future outlook within the BIMSTEC framework optimistic. Anticipated advancements would incorporate laying out transmission lines, updates, and cross-line associations with work with upgraded energy exchange and collaboration.
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The MoU (Memorandum of Understanding) for establishing the BIMSTEC Grid Interconnection was signed by the member countries on 31st August 2018. Initiation of BIMSTEC Grid Interconnection Master Plan Study, with support from development partners, including the Asian Development Bank (ADB) also took place.
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Enhanced grid stability and reliability
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More efficient use of energy resources
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Potential reduction in electricity costs
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Promotion of renewable energy integration on a regional scale
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Renewable energy promotion: Cross-border energy trade would encourage the development of renewable energy sources like hydropower, solar, and wind. Countries with high renewable potential can export clean energy to neighbours, potentially reducing overall fossil fuel consumption.
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Hydropower development: Many cross-border energy projects in South Asia involve hydropower, especially in countries like Nepal and Bhutan. With the huge hydropower capacity of both of these nations, the advancement of hydropower and cross-line interconnections have the potential for the four nations (BBIN) to further develop energy supplies, advance routes, reduce floods and energize networks, and add fundamentally to financial development. While hydropower is renewable, large-scale dams can have significant environmental impacts, including:
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Disruption of river ecosystems
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Displacement of local communities
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Changes in sedimentation patterns
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Potential impacts on downstream water availability
India doesn’t have an adequate amount of resources to fully develop and enhance its efforts for the procurement of Solar Energy, so ISA plays a very important role in the addition of capacity for making it commercially viable for India. It would also be a safeguard for India since this strategy of joining hands with the new international organisation will improve India’s security levels.
According to Indian Council of World Affairs, The ISA is the brainchild of India and France “to mobilise efforts against climate change through the deployment of solar energy solutions”. The Indian government-led capacity building projects have shown great results, one of which is the participation of people in scheme led by Indian Technical and Economic Cooperation (ITEC) backed by ISA to solar energy train for a period of 3 weeks.
The union has proven to be beneficial for both sides, as it adds to the economic growth, increases the scope of access to cleaner energy, technological advancement and security of the procured energy. The success would however still heavily depend on how determined the countries other than India are to maintain and regulate their energy usage, how they can form an alliance by concocting pragmatic approaches to tackle the problems that may arise out of diverting from the agreed framework.
SAARC
Among the constituents of the South Asian region, India arguably has the most varied geophysical structure, relatively complex economy and largest energy consumption requirements. Being the -consuming country in the world and the largest among the SAARC members, India has consistently been the emissary for a regional power-sharing arrangement since the early 2000s. India had entered into significant electricity trade agreements (“Agreement”) with various SAARC nations since the early 1990s. India’s Agreement with Bhutan constituted three-fourths of Bhutan’s electricity generation. The nation’s Agreement with Nepal facilitated the initiation of projects for the exchange of greater than 4090 MW (2012) between the countries. India’s Agreement with Bangladesh and Sri Lanka provided for an exchange of 500 MW (2013) and 1000 MW (2006), respectively. Through the Dhaka declaration of November 2005, India welcomed the proposal for establishing the SAARC Energy Centre in Islamabad in 2005 for the development of alternative sources of energy, hydropower, the constitution of the South Asian Energy Dialogue process, etc. Thus, the Declaration led to the creation of SAARC Energy Centre in 2006. The country further offered to hold the summit fourteenth SAARC summit in New Delhi in 2007, which saw the proposal for the first ‘South Asia Energy Dialogue’ in March 2007 in Delhi. The dialogue paved the way for the genesis of ‘SAARC Energy Ring’ furthering the establishment of a “trans-national energy lines for trade in electricity, gas and oil as facilitating and promoting trade in energy in South Asia region.” The SAARC Framework Agreement for Energy Cooperation (Electricity), formulated as an aftermath of the 18th SAARC summit held in Nepal in 2014, is another material contribution to the South Asian sub-regional energy-sharing agenda. The framework facilitates “cross-border trade of electricity amongst the Member States on a voluntary basis and an integrated operation of the regional grid across SAARC.”
BIMSTEC
Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) acts as a steady option for strengthening energy cooperation and increasing awareness amongst the member states by putting forth an initiative of regional energy cooperation and suggesting proper additions and catching up with the needs of the countries involved in it. Some of the important points highlighted of how BIMSTEC endorses energy cooperation and an increase in diversity for the electricity trade include-
SARPEX
The South Asian Regional Power Exchange (SARPEX) is an innovative concept aimed at facilitating electricity trading among South Asian countries. Currently, this platform is designed to include Bangladesh, Bhutan, India, and Nepal, as these nations already have interconnected power grids. The primary goal of SARPEX is to create a unified marketplace for electricity, allowing these countries to buy and sell power across their borders more efficiently.
This regional power exchange concept was explored in greater depth during a stakeholder consultation workshop held in June 2017. The purpose of this workshop was to assess and demonstrate the viability of establishing a regional power grid and the associated trading platform. The idea behind SARPEX is rooted in the understanding that a collaborative approach to power management can lead to numerous benefits for participating countries, such as: Improved energy security through diversified power sources
By creating a platform for cross-border electricity trading, SARPEX aims to optimize the use of power resources across the region. This could help balance supply and demand more effectively, especially considering the varying peak consumption times and diverse energy production capabilities of the participating countries.
Environmental Impacts
Building cross-border transmission lines can have localized environmental impacts, such as deforestation and habitat fragmentation. However, a well-planned regional grid could optimize energy distribution and potentially reduce the need for multiple smaller, less efficient power plants.
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Air Pollution: If the trade leads to a reduction in coal-fired power plants, it could significantly improve air quality in the region. The SAARC Framework Agreement for Energy Cooperation (Electricity), proposes the distribution of power production among several huge plants, thus eradicating several smaller ones. The economies of scale in energy production proves to be crucial in controlling the wastage of raw material as well as the resultant effluents released into the atmosphere, including several air pollutants. However, if it promotes increased fossil fuel use in some areas, it could exacerbate air pollution and greenhouse gas emissions.
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Water resources: Energy trade involving hydropower can affect water resource management across borders, which could lead to both positive (better-coordinated water use) and negative (potential for conflicts over water rights) outcomes. There are many prospecting and ongoing hydroelectric power schemes near the upstream followings as energy demand continues to rise: Bhutan, India, Nepal and Pakistan. What is missing from most of these projects is consideration of factors beyond electricity production, disregarding the fact that with better planning and more cooperation with riparian communities up and downstream, there could be added value created through alteration of the system. Most of the hydropower projects in the two countries are of run-of-the-river types that cannot produce electricity in the dry season for domestic use and irrigation and do not support many downstream benefits. Examples include such projects that, in their attempts to minimize risks associated with water availability for hydropower generation, either pose potential risks in the form of undesirable changes to the area’s navigability, its connection to other regions, or flood control – all with regard to public goods and services at the regional level.
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Regional cooperation: A territorial power market will increase collaborations among clean energy assets, permit the district to tap its massive hydropower potential, and guarantee minimal expense energy access in South Asia. It would necessitate cooperation on environmental standards and impact assessments. This could lead to improved regional environmental governance and shared responsibility for ecological protection. Among South Asian nations, collaboration in the space of digital connectivity, advanced infrastructure, and cross-line advanced instalments moving quick.
The Akhaura – Agartala rail interface between Tripura and Bangladesh was initiated for the current year, and Bangladesh gave India access to its Chattogram and Mongla ports for travel and freight vessels, pushing territorial availability in the Straight of Bengal region. India and Sri Lanka resuscitated their ship administration following 40 years, while India and Nepal re-established the Treaty of Transit, giving Nepal admittance to India’s inland streams alongside arrangements for new rail joins. India and Bhutan likewise consented to reinforce local network with an emphasis on the very first rail interface among Assam and Bhutan, and on overhauling line post framework. Bangladesh and Bhutan consented to a travel arrangement empowering Bhutan to utilize Bangladesh’s streets, streams, rail routes, aviation routes, and seaports for its third-country exchange.
Conclusion
The cross-border energy trade that has been talked about and encouraged throughout the article already exists at a bilateral level. Energy cooperation in South Asian countries via cross-border trade holds a good potential for growth in cooperation and economic development in a sustainable manner. As highlighted in this paper, India has taken the role of being a leader in pushing this process forward because of its strategic location, technical know-how, and economic prowess in the continent. Cross-border energy trade has evolved from simple bilateral agreements to more structured arrangements like the SAARC and the BIMSTEC, not only depicting the increasing realization of cooperation at the regional level. Concepts like the SAARC Energy Ring, OSOWOG, and SARPEX show how South Asia can look forward to developing a single and coherent market for energy. The future of cross-border energy trade in South Asia will depend on striking a balance between economic objectives and environmental sustainability. This will require:
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Continued investment in renewable energy sources and grid infrastructure.
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Development of comprehensive environmental impact assessments for cross-border projects.
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Focus on optimizing existing resources through improved grid interconnections.
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Implementation of regional environmental standards and governance mechanisms.
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Promotion of energy efficiency and demand-side management across the region.
The cross-border energy trade that has been talked about and encouraged throughout the article already exists at a bilateral level. Energy cooperation in South Asian countries via cross-border trade holds a good potential for growth in cooperation and economic development in a sustainable manner. As highlighted in this paper, India has taken the role of being a leader in pushing this process forward because of its strategic location, technical know-how, and economic prowess in the continent. Cross-border energy trade has evolved from simple bilateral agreements to more structured arrangements like the SAARC and the BIMSTEC, not only depicting the increasing realization of cooperation at the regional level. Concepts like the SAARC Energy Ring, OSOWOG, and SARPEX show how South Asia can look forward to developing a single and coherent market for energy. The future of cross-border energy trade in South Asia will depend on striking a balance between economic objectives and environmental sustainability. This will require:
Authors:
Dr. Ankit Awasthi is an Assistant Professor and Head of the center for WTO-WIPO Studies at HNLU, Raipur
Karnika H Gaira is a second year B.A. LLB student at HNLU, Raipur
Disclaimer:
The views expressed by the authors are personal.
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